Bowie bonds are an asset-backed security which uses the current and future revenue from albums recorded by musician David Bowie as collateral. The annual payments on the bonds are made from money generated from a particular property. For Bowie Bonds, the asset at the core of the investment is the current and future revenues generated […]
Capital account convertibility means that foreign exchange can be freely bought and sold to purchase foreign financial assets or equity investments. Capital account convertibility regulations impact areas such as Authorized Dealers, Foreign Direct Investment, Foreign Institutional Investment, Bonds, Venture Capital, Bonds, Derivatives, Setting Up of Branch Offices and Borrowings and Investments by Non-Residents, Borrowings in foreign […]
Forward rates can be quoted in two ways – as an outright quote or as forward points. The outright quote is simply a bid-ask price similar to spot market quotes. The forward points are the amounts that need to be added to or subtracted from spot rates. The forward premium or discount is typically the […]
Prime brokerage typically refers to an investment bank’s package of services to clients, mostly hedge fund clients. The benefit of such a service is that it centralizes a number of tasks such as securities clearing, custody, financing leverage, foreign exchange trading, securities lending etc.
Return on equity is a financial ratio that measures the return generated on shareholder’s equity, the accounting value of shareholder’s equity which reflects the accumulation over time of amounts received by the company from share issue plus profits (retained earnings) by the company. The formula can be expressed as Profit after tax/shareholder’s equity.
An effect caused by a rise in price that induces a consumer (whose income has remained the same) to buy more of a relatively lower-priced good and less of a higher-priced one. Consumers always to tend to shift from spending on higher priced product to a lower priced one as the prices rise.
The term structure of interest rates is typically defined as a yield curve displaying the relationship between spot rates of zero-coupon securities and their term to maturity. This concept is derived from the ‘yield curve’ which describes the relationship between interest rate and tenor/time to maturity across various tenors; 2 to 20 years. Shape of […]
Transshipment is considered as a legal term and involves transfer of goods/container from one conveyance to another for reshipment. For example sea transport to road transport. Shipments involving more than one mode of conveyance issue multi-modal shipment document which is a single document covering the entire shipment.
The uncovered interest parity depicts that the difference in interest rates between the two countries reflects the rate at which investors expect the high- interest rate currency to depreciate against the low- interest rate currency. Premiums and discounts on forward rates are based upon interest rate parity between the two countries/currencies involved in the transaction.
Any transfer of funds from one account to another which occurs electronically is known as an electronic transfer. Federal benefit, wage, salary, retirement fund, pension, bill or vendor payment can be effectively transferred through electronic transfer thereby eliminating the requirement of checks, deposit slips and lengthy forms.
Float time is the amount of time between an individual submitting a payment via check and the time that individual’s bank gets the approval to move funds from the individual’s account. In India the float time is 2 banking days and in U.S the float time is 1 banking day, float time varies from country […]
Standard deviation (σ) is the square root of the variance. In other words Standard deviation brings out all the examples clustered around the mean of the data. If the data is spread apart or skewed the standard deviation will be high. Hence stock with high volatility will have a higher standard deviation whereas as stable stock […]
Bullion is either gold or silver in bulk form regarded as raw material for use in industry, coinage or as a nation’s reserve. Bullion refers to precious metals in bulk form which are regularly traded on commodity markets. The value of bullion is typically determined by the value of its precious metals content, which is defined […]
Containerization is the system of using a shipping container which is made of steel and standard in size and dimension to load, unload, stack and transport merchandise efficiently over long distances. Containerization facilitate transportation of merchandise through multi- modes of transport.
Beta is asset’s sensitivity to market risk. Stocks that carry higher beta ( greater than 1) are considered to be more volatile than market and therefore should have higher expected returns. Capital Asset Pricing Model (CAPM) presented by Stanford professor William Sharpe explains the theory of beta.